Monte Capital Group LLC

FEES AND COMPENSATION

Monte Capital charges both asset-based “management fees” and performance-based “performance fees”
to certain of its clients and investors, which vary among the Monte Capital Funds, Client Accounts,
mutual funds and variable insurance trusts as follows:

Monte Capital Fund Management Fees. With respect to its management of the Monte Capital Funds,
Monte Capital generally expects to receive a quarterly asset-based management fee equal to .375% (1.5%
per annum) of the net asset value of each such Monte Capital Fund. These management fees are expected
to be payable quarterly in advance generally within five (5) business days after the beginning of each
calendar quarter. Monte Capital may, in its sole discretion, waive or reduce the management fee with
respect to any investor in the Monte Capital Funds, including its affiliates or employees. Notwithstanding
the foregoing, these management fees may be negotiated by Monte Capital with respect to investors in the
Monte Capital Funds based on a variety of factors, including, but not limited to, the size, composition and
complexity of a Monte Capital Fund’s portfolio, length and nature of Monte Capital’s relationship with
the investor or other factors deemed relevant by Monte Capital.

Client Account Management Fees. With respect to its management of a Client Account, Monte Capital
generally receives a quarterly asset-based management fee equal to .50% (2% per annum) of the net asset
value of each such Client Account. The Client Accounts’ management fees are payable quarterly in
advance generally within five (5) business days after the beginning of each calendar quarter. Monte
Capital may, in its sole discretion, waive or reduce the management fee with respect to any Client
Account. Notwithstanding the foregoing, these management fees may be negotiated by Monte Capital
with respect to certain Client Accounts based on a variety of factors, including, but not limited to, the
size, composition and complexity of the Client Account, length and nature of Monte Capital’s
relationship with the client, special services agreed upon with the client or other factors deemed relevant
by Monte Capital.

Management fees for Client Accounts are billed to the applicable clients at the beginning of each quarter.

Non-Discretionary Advisory Fees. With respect to those clients that engage Monte Capital to provide
customized non-discretionary advisory services, Monte Capital’s fees for such services will be
specifically negotiated with the client based on the client’s particular investment and financial situation,
risks and goals. Monte Capital generally charges for such services at an hourly rate of up to $500 per
hour, or as otherwise agreed upon by Monte Capital and such clients.

Other Fees and Expenses. Monte Capital’s clients will incur other expenses in connection with Monte
Capital’s advisory services. Such expenses may include transaction fees, brokerage commissions,
custody fees; government charges, taxes and duties; transfer fees and registration fees; withholding taxes
payable and required to be withheld by issuers or their agents; and other related costs and expenses that
will be incurred by a client with respect to the transactions for its Client Account. Clients will also bear
the investment management or other fees charged by any mutual funds or ETFs in which Monte Capital
may invest on behalf of a Client Account.

Investors in the Monte Capital Funds will also bear additional charges and expenses in connection with
such investment. Each Monte Capital Fund incurs legal and organizational expenses in connection with
its formation and initial offering, which generally will be borne by the applicable fund (and, therefore,
indirectly by its investors). In addition, the Monte Capital Funds may also bear ongoing expenses, which
may include, without limitation, legal, bookkeeping, accounting, auditing, recordkeeping, administration,
computer and clerical expenses (including expenses incurred in preparing reports and tax information and
regulatory authorities and expenses for specialized administrative services); printing and duplication
expenses; investment related travel expenses, investment research expenses, market data, newswire and
data processing expenses; software and connectivity charges; bank charges and borrowing costs;
exchange, board of trade or other trading or execution facility membership or participation expenses;
offering expenses; filing fees; directors’ and officers’ liability insurance; investment and operating
expenses; and other expenses necessary to operate such fund. Additional details regarding the fees and

expenses borne by investors in the Monte Capital Funds will be set forth in the prospectuses and/or other
constituent documents for such funds, as applicable.

             PERFORMANCE BASED FEES AND SIDE-BY-SIDE MANAGEMENT

Monte Capital also receives performance-based compensation from Client Accounts:

Client Account Performance Fee. Monte Capital will also charge performance-based compensation with
respect to the Client Accounts that it manages. Unless otherwise negotiated with a particular client, this
performance-based compensation generally ranges between 10% and 20% of the net increase in value (if
any) of the assets in the Client Account (including both realized and unrealized gains and losses) with
respect to the applicable measurement period, after payment of the management fees described above and
recovery of losses in the Client Account in prior measurement periods.

This performance-based compensation is calculated and payable as of the last day of each calendar
quarter, upon termination of the advisory relationship with Monte Capital or upon withdrawal by a client
of all or part of its investment in the Client Account.

Conflicts of Interest Related to Performance-Based Compensation. A significant percentage of the
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TYPES OF CLIENTS

To date, Monte Capital has only provided investment advisory services to private investment funds;
however, Monte Capital has to determined to offer investment advisory services to individuals, including
high-net worth individuals, trusts and estates and corporations and other business entities. Client
Accounts are generally subject to a minimum initial investment of $10,000,000, and the Monte Capital
Funds are generally subject to a minimum initial investment of $1,000,000, in each case, unless such
minimum is waived by Monte Capital in its sole discretion.

        METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

The Fund aims to maximize total return via a combination of interest income and capital appreciation.

Through the Fund’s investment in the Master Fund, the Fund will access US fixed income mutual funds
(“Underlying Funds”) managed by a premier manager, Frost Investment Advisors (“Frost”). The Master
fund will invest the majority of the assets in Frost Total Return Bond Institutional (FIJEX) as a core
strategy, with additional investments in Frost Credit Institutional Fund (FCFIX and Frost Low Duration
Bond Fund (FILDX). The Investment Manager reserves the right to allocate to funds managed by other
strategy managers besides Frost if it deems such allocation to be beneficial to investors.

The Underlying Funds’ investments will include investment grade securities including US treasuries,
agency debt, corporate debt, asset and mortgage backed securities, and taxable municipal bonds.
Minimum rating in the lowest investment grade category (i.e., rated BBB by Standard & Poor’s or Baa by
Moody’s Investors Service, or higher, or unrated and considered by the strategy manager to the
Underlying Fund to be comparable in quality) at the time of purchase and bank instruments, repurchase
agreements, and other U.S. government securities. In addition to capital appreciation and income, the
strategy has a secondary goal of minimizing any potential twelve month negative returns. Therefore, the
strategy chooses to stay well diversified and limit interest rate risk. The Underlying Funds weightings in
these fixed income asset classes is dynamic as the respective managers deem appropriate and use
macroeconomic, credit, market analysis and proprietary metrics to select portfolio securities. From time
to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in
response to market conditions or in the event attractive investment opportunities are not available. Cash
may be invested in interest bearing instruments such as money market funds, CDs etc..

The Investment Manager employs the following four primary strategies to varying degrees depending on
its views of economic growth prospects, interest rate predictions and relative value assessments: 1)
Interest rate positioning based on duration and yield curve positioning, 2) Asset category allocations, 3)
Credit sector allocations relating to security ratings by the national ratings and 4) Individual security
selection. The “total return” sought by the strategy consists of income earned on the Fund’s investments,
plus capital appreciation, if any, which generally arises from decreases in interest rates or improving
credit fundamentals for a particular sector or security.

The portfolio duration is actively managed by purchasing securities such that the average weighted
duration of the portfolio will typically range within plus or minus three years of the portfolio benchmark’s
duration even though over short periods may deviate by larger amounts. The strategy uses Bloomberg
Barclays US Aggregate Bond Index as its benchmark.

Other features of the strategy include: investing in floating-rate products (“floaters”) where the coupon is
indexed to LIBOR, CPI, or some other economic indicator: No mandate to maintain any particular sector
weighting, therefore sector weighting can be adjusted based upon proprietary factors or macro outlook.
The strategy invests across the entire US bond market, as opposed to investing only in those sectors
represented in the Barclay’s Aggregate Bond Index (benchmark). There is no currency risk as the
strategy only participates in USD denominated instruments. Investments are made in all cash bonds and
no leverage or derivatives are utilized.

Customized Programs and Non-Discretionary Advisory Services

In addition to the programs described above, Monte Capital may provide customized advisory services in
respect of selected clients, to the extent agreed upon between Monte Capital and such client. This advice
may entail use of the Theta programs, as described above, or may involve other customized advisory
services based on a particular client’s investment and financial situation, risks and goals, which may

include consulting on portfolio construction, investment opportunities, hedging of existing assets and/or
such other advisory services as Monte Capital and the client may agree.

Monte Capital’s instrument selection and portfolio management is limited by the prospectus of the Monte
Total Return US Bond Fund Ltd. Those prospectuses will be provided to any non-US citizen or non-US
resident investor upon request.

Certain Risk Factors

The identification of attractive investment opportunities is difficult and involves a significant degree of
uncertainty. Potential clients should consider the following risks before engaging Monte Capital to
manage their accounts.

Equity Securities. Monte Capital may trade in equity securities on behalf of the Client Accounts and the
Monte Capital Funds. Common stock and similar equity securities generally represent the most junior
position in an issuer’s capital structure and, as such, generally entitle holders to an interest in the assets of
the issuer, if any, remaining after all more senior claims to such assets have been satisfied. Holders of
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